Tuesday, December 22, 2015

When it comes to having good credit, you already know how important it is to pay your bills on time. But how you pay your bills -- not just whether you pay them -- is becoming increasingly important.

In the past two to three years, all three major credit bureaus have added a treasure-trove of new data to their credit reports. Analysts are slicing and dicing "trended data" in hundreds of ways, but probably the biggest change is that lenders now know exactly how you pay your bills: whether you're a high-risk "revolver" who carries a balance, or a low-risk "transactor" who pays your credit cards in full every month.

Research shows that information is an important predictor of risk. Revolvers are three times more likely to default on new credit cards and auto loans and five times more likely to default on current credit cards than transactors, a TransUnion study found. Partial payers -- those who actively pay down their balances -- are a lower risk than those who just make the minimum payment.

But that's not the only way the credit industry is using the new data. They also analyze:

What kind of spender you are.

How your credit behavior is changing over time (are you trending up or down?).

How often you open and close accounts.

What you spend every month -- and more.

Then, they're pairing that information with data from other sources, such as property and employment records, to create new models that can predict everything from your interest in a rewards card to your likelihood of default on different types of loans.

"In the credit industry, this new data is a game-changer," says credit expert John Ulzheimer, who has worked for credit scorer FICO and credit bureau Equifax. "For lenders, it tells a much richer story about your relationship with your credit cards than what has traditionally been on your credit report. For consumers, it means how you manage your credit card accounts may determine whether you get a loan and what terms you'll get."

Trends in your payment history
Until recently, your credit report displayed a snapshot of your accounts at a single point in time: your monthly balance, your credit limit and whether you failed to make at least the minimum payment.

Now, credit reports from all three bureaus show two years of payment history, so lenders can see exactly what you paid on each account each month and whether you tend to carry a balance, pay more than the minimum or pay off your card in full.

In addition to telling them how you pay your bills, seeing your payment behavior over time gives lenders a more comprehensive understanding of your financial situation.

"This is very powerful information for us," says Paul DeSaulniers, senior director for risk scoring and trended data solutions at Experian. "Now, we can see what the trend is: Are you gathering debt or paying down debt?"

For now, the new information is not part of the calculation used to create your traditional credit score from FICO or its biggest rival, VantageScore, although industry observers say both companies are likely examining whether to incorporate it. But mortgage-finance company Fannie Mae announced in November that it will require lenders to use the data in loan decisions beginning in mid-2016. Because Fannie Mae backs the majority of all new residential mortgages in the U.S., that change is expected to have a sweeping effect on the mortgage market.

The new data may help potential buyers who have a short-term blip on their credit that's pulling their score down, says Alex Johnson, senior analyst at Mercator Advisory Service.

"Let's say you have a credit score of 690, and that's right around the lender's cutoff," he says. "If you lost your job during the recession and your score went down, the bank can see that your behavior over last 18 months has really improved and has been very strong from a credit risk perspective. So they may be more lenient in making the loan."

On the other hand, if you have a 730 FICO score that would normally be well within the bank's risk criteria, you may be declined if the bank spots a downward trend in your payment behavior.

New trended data products
The credit bureaus are using their trended data to create new products they can sell to lenders that better analyze consumer risk. Experian sells a trended data product called Trended Solutions, Equifax offers something called Dimension, and TransUnion has a product called CreditVision.

"We've taken all of that raw data and drove it into actionable results for our clients," says DeSaulniers of Experian. "We offer well over 50 products and 500 trended attributes."

In their marketing, the bureaus tout the ways they can categorize potential borrowers beyond just transactors and revolvers. They are also combining trended data with alternative data sources such as checking/debit account information, property and tax records, rent and utility payments and payday loan information to make it easier for lenders to evaluate people who don't have a credit history.

TransUnion has used the combined data to create a new score for customers called CreditVision Link, says Mike Mondelli, senior vice president of Alternative Data Services at TransUnion. Mondelli says the new model allows TransUnion to score 95 percent of the U.S. population, including 60 million consumers who were unscorable using traditional methods.

How trended data is used
Here are some other ways financial institutions are analyzing and using the new data:

Whether you are adding debt or paying it off. Take two consumers who both have $10,000 in debt. On the old report, they would look exactly the same, even if one had $20,000 in debt two years ago and the other had only $3,000. "So one person recently added $8,000 in debt and the other has recently paid off $20,000," DeSaulniers says. "They are very different from a risk perspective."

How you handle a higher utilization rate. Under the traditional model, if your utilization rate (the sum of your balances divided by your credit limit) is high, you are considered higher risk. But if a lender looks at two years of data and sees that you've consistently had a 40 or 50 percent utilization rate with no ill effects, "That's a consumer I want to do business with," DeSaulniers says. "Even though they have a high utilization rate and their credit score may lower, I know they have been able to manage it over time."

Changes in your payment patterns. If you suddenly start paying just the minimum payment on one account you used to pay in full, that may be a sign that you're about to default on other accounts. Even if you're still making your normal payment, lenders looking at the data may reach out to you to make sure they remain a top priority.

How much you spend each month. Having access to the raw dollar amounts you pay every month helps lenders identify the high-dollar transactors who are going to rack up swipe fees for credit card companies. It also gives lenders a better idea of your discretionary income, Mondelli says. "If someone can make a payment of a couple thousand dollars to their credit card on monthly basis and they do that consistently, that gives you some insight into what their income might be and their ability to pay for new credit products," he says.

The bureaus say there are hundreds of other ways they are analyzing the data, but they are reluctant to share too much for competitive reasons. The new, deeper level of analysis can be good news for consumers who are on an upward trend, who have shied away from traditional credit products but now need credit, or who pay off their credit cards every month.

But it's going to cut both ways. "You will have people who will benefit from this and people who won't benefit from this," Ulzheimer says. "The revolvers who pay some portion of their bill on time every month will be frustrated that they don't benefit. In their minds, they're a good credit risk because they're not delinquent on their bill. But it won't matter."

We call this our “curveball” account. It’s an emergency fund for use when life throws us curveballs — large medical bills, a job loss or reduction in income, major home repairs, that kind of thing.

3. Make a plan for big-ticket items.

My husband and I agreed that we would use one family credit card for large purchases, such as airline tickets and hotel stays. We still have our separate credit cards — it’s wise to keep your own credit cards to maintain your credit score and credit history. Using them once or twice a year should be sufficient. And don’t close those cards because it will affect your overall credit score.

Implementing the system

1. Draw up a budget for fixed and variable expenses.

Add up how much you need in each category. This will be your guideline for how much should be in each of your checking accounts.

When your paycheck comes in, allocate the designated amounts into each checking account based on the budget you created. The sum earmarked for the curveball account can go there directly.

3. Pay fixed costs directly.

All bills are paid automatically from our fixed-expenses account. We do not have to write any checks, and no debit card is necessary. This account has a cushion of a few hundred extra dollars in case a bill shows up unexpectedly or before we have a chance to replenish the account.

4. Pay variable expenses from the second account.

This account should have a debit card, which you can use for purchases.

If an emergency arises, you can transfer funds within 24 to 48 hours. You can then access the money with a check or debit card.

Realizing the benefits

Once I implemented this system, the process of tracking expenses wasn’t so cumbersome anymore. Separating expenses into fixed and variable categories meant I didn’t have to worry constantly about checking account balances. Having fewer transactions in each account also made it easier to see the bigger picture of our spending.

Every family’s finances are different, of course. Feel free to customize my system as necessary. The point is to get — and keep — a grasp on the flow of your money. If you know exactly what’s coming in and going out, you can’t be surprised by debt.

Thursday, November 19, 2015

Founded in 1956, FICO introduced analytic solutions such as credit scoring that have made credit more widely available, not just in the United States but around the world. We have pioneered the development and application of critical technologies behind decision management. These include predictive analytics, business rules management and optimization. We use these technologies to help businesses improve the precision, consistency and agility of their complex, high–volume decisions.This is a good, very informative video for everyone who has wondered where FICO originated from!

The Federal Trade Commission and other law enforcement authorities around the country announced the first coordinated federal-state enforcement initiative targeting deceptive and abusive debt collection practices. This nationwide crackdown encompasses 30 new law enforcement actions by federal, state, and local law enforcement authorities against collectors who use illegal tactics such as harassing phone calls and false threats of litigation, arrest, and wage garnishment. The cases announced today bring to 115 the total number of actions taken so far this year by the more than 70 law enforcement partners in the Operation Collection Protection initiative.Some of these actions allege that collectors knowingly attempted to collect so-called phantom debts – phony debts that consumers do not actually owe. The illegal practices targeted by authorities also include the failure of some collectors to give consumers legally required disclosures and notices, or to follow state and local licensing requirements.

“Being in debt is stressful enough for many Americans without also being subjected to intimidation and false threats,” FTC Chairwoman Edith Ramirez said. “Debtors have certain rights and rogue collectors that step outside the law will face the consequences of illegal behavior.”

Illinois Attorney General Lisa Madigan said, “My office receives thousands of calls and complaints each year from consumers who are victims of illegal debt collection tactics. Through our partnership with the FTC and states across the country, we are putting scam operations out of business and protecting consumers from abusive practices by legitimate creditors.”
Minnesota Commerce Commissioner Mike Rothman added, “Illegal and abusive tactics by debt collectors are a nationwide problem that requires a nationwide response. By working together in this new federal-state collaboration, we are joining our forces to stop these abusive practices and protect the public.”
As part of the initiative, the FTC announced five new enforcement actions against debt collectors engaged in allegedly illegal practices. The FTC has asked federal courts to halt three abusive debt collection operations. One of the complaints has been filed under seal, and so the Commission cannot yet disclose details of that case. Two other operations have agreed to settle Commission charges:BAM Financial: The FTC has alleged that the defendants extracted payments from consumers through intimidation, lies and other unlawful tactics. According to the FTC’s complaint, the defendants bought consumer debts and collected payment on their own behalf by threatening consumers with lawsuits, wage garnishment and arrest, and by impersonating attorneys or process servers. They also unlawfully disclosed debts to, or harassed, third parties, failed to identify themselves as debt collectors, and failed to notify consumers of their right to receive verification of the purported debts.
In one instance, the defendants falsely told a consumer’s 84 year-old mother they had a warrant for her daughter’s arrest, and later told the consumer they represented a bounty hunter and would have the sheriff serve her with process. The defendants falsely told another consumer that she would not be allowed to see her children, and that they would garnish her wages and report her to the Internal Revenue Service if she did not pay.
The Commission vote authorizing the staff to file the complaint was 4-0. The U.S. District Court for the Central District of California issued a temporary restraining order against the BAM Financial defendants on October 21, 2015, halting their operations.Delaware Solutions: In a joint action by the FTC and the Attorney General of the State of New York, the Delaware Solutions defendants are charged with attempting to collect on debts they knew were bogus. The defendants bought payday loans supposedly owed to a company that repeatedly told them to stop collection efforts because the debts were invalid, and ignored consumers’ evidence that they had never authorized a payday loan.
According to the complaint, the defendants also failed to identify themselves to consumers as debt collectors, falsely portrayed themselves as process servers or attorneys, and falsely threatened arrest or litigation. The defendants also unlawfully disclosed consumers’ debts to third parties in an attempt to embarrass the consumers into paying them.
The Commission vote authorizing the staff to file the complaint was 4-0. The U.S. District Court for the Western District of New York issued a temporary restraining order against the Delaware Solutions defendants on October 6, 2015, halting their operations. This is the seventh case against an abusive Buffalo debt collection enterprise that the FTC has filed in the last two years, four of which were filed jointly with the New York Attorney General’s office.K.I.P., LLC: Under a settlement with the FTC and the Illinois Attorney General, a married couple who ran a phantom debt collection scheme based in Aurora, Illinois, have agreed to a $6.4 million judgment, and a ban on working in any debt collection business.
In April 2015, the FTC and the Illinois Attorney General charged K.I.P. LLC, and Charles and Chantelle Dickey, with threatening and intimidating consumers to pay payday loan debts they either did not owe, or did not owe to the defendants. The U.S. District Court for the Northern District of Illinois, Eastern Division subsequently halted the operation and froze the defendants’ assets pending litigation.
According to the complaint, the defendants used a host of business names to target consumers who obtained or applied for payday or other short-term loans. Claiming those loans were delinquent, they threatened to garnish consumers’ wages, suspend or revoke their driver’s licenses, have them arrested or imprisoned, or sue those who did not pay. Many consumers paid, even though they may not have owed the debts, because they believed the defendants would follow through on their threats or because they simply wanted to end the harassment.
The proposed stipulated final order also prohibits the defendants from misrepresenting financial products and services, profiting from customers’ personal information, and failing to dispose of such information properly. It imposes a $6,403,781 judgment, including proceeds from the sale of a car and the turnover of any assets held by third parties.
The Commission vote approving the filing of the proposed stipulated final order was 4-0. The proposed order is subject to approval by the U.S. District Court for the Northern District of Illinois, Eastern Division.National Check Registry: The operators of a debt collection scheme agreed to a ban on participating in any debt collection business to settle charges brought by the FTC and the New York Attorney General’s Office in June 2014 that the defendants used lies and false threats to collect millions of dollars from consumers.
The settlement order prohibits the defendants from misrepresenting material facts about any financial-related product or service, including lending, credit repair, debt relief, and mortgage assistance relief services, and profiting from customers’ personal information. One of the defendants, Joseph Bella, will pay $112,000 and surrender certain bank accounts, two cars and two boats.
The Commission vote authorizing the staff to file the proposed stipulated final order was 5-0. The U.S. District Court for the Western District of New York entered the order on October 16, 2015.
The orders involving K.I.P., LLC and National Check Registry impose millions of dollars in judgments, include strong injunctive relief and monitoring provisions, and ban the defendants from working in the debt collection industry for life. With the new settlements, the FTC has now secured final judgments in seven cases so far in 2015, placing 33 defendants under strict federal court orders, securing over $88 million in judgments, and banning 24 defendants from working in debt collection.NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge.
To learn more, read Facing Debt Collection? Know Your Rights and Fake Debt Collectors.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

If you have become overwhelmed and fallen behind in paying your credit obligations, you are not alone. Roughly one in three Americans have unpaid bills that have been sent to collection agencies. Being contacted by debt collectors can create psychological stress and makes getting back on sound financial footing even more challenging. Knowing how to handle requests for repayment can put you in charge of getting your credit back on track.

First, and most importantly: If you believe the debt is not yours, send a letter to the collection company demanding verification.

If you have an unpaid debt and are being contacted by debt collectors, your first step is to contact the original creditor. Call the credit card agency, doctor’s office or cellphone company directly and offer a plan to settle your payments. Even when an account is turned over to a collection agency, the majority of creditors continue to own the debt. The collectors are hired hands who get paid when they recover it. The more money you pay the original creditor, the more they earn. This explains why debt collectors are frequently aggressive in their approach. They want you to pay as much as you can, as fast as you can, because their own paycheck depends on it.

Sometimes a debt collection agency will “buy” the debt at a reduced face value from creditors who believe they will be unable to collect. The agency then tries to maximize how much it can collect. In this case, the bad news is that you are going to have to deal with the collection agency and not the original creditor. The good news is that federal law compels these collection agencies to follow specific rules of contact when trying to recover a debt.

No matter how outside agencies obtain your contact information to pursue collection, they generally follow a set pattern of contact once they have it. First, they send a letter. Next, they begin making calls. Sometimes – but rarely – they will file a lawsuit. These collection activities can be reported to the three major credit bureaus, which is particularly damaging because the information stays on your report for up to seven years – even if you settle the account.

A debt collector must inform you that he is a debt collector trying to collect a debt and that any information obtained will be used for that purpose. In some cases, this contact can feel intimidating. But the Fair Debt Collection Practices Act limits the procedures a third-party agency can use to collect.

Don’t be bullied. By law, agencies are not allowed to:

threaten you in any way, including threats of jail time or wage

garnish wages (unless they have obtained a court ordered judgment against you)

try to collect more money than is owed

use abusive language

communicate with third parties, like friends or relatives, regarding your debt

harass with phone calls late at night (after 9 p.m.) or in the early morning (before 8 a.m.)

call at work if you have requested not to be contacted at your place of business

continue to contact a debtor who has requested in writing not to be contacted

If you are being harassed by overly aggressive debt collectors, you can report suspected violations to the Federal Trade Commission at 1-877-FTC-HELP.

If the debt is valid, and the collector has not violated a law in trying to collect it, negotiating a settlement is often the best resolution. If your debt is complex or you are being contacted by multiple collection agencies, you may want a lawyer to negotiate on your behalf. But for the most part, you should be able to deal with the agencies yourself.

When you settle a debt, ask to have any credit reporting that lists the collection amount removed. Follow up by reviewing your credit reports carefully and correcting any misinformation.

Robert Massi joined Fox News Channel (FNC) in 1996 and currently serves as a legal analyst as well as host of Bob Massi is the Property Man, part of FNC’s weekend lineup (Saturday, 12 p.m. ET / encore Sunday, 3 p.m. ET). The program highlights the various facets of the housing industry and features experts who break down current property trends and pricing deals. Massi appears weekly on Fox & Friends for his segments “Rebuilding Dreams” and “Legal Ease” along with appearing at other times on Fox News Channel and Fox Business Network (FBN) for real estate and legal segments.

Saturday, October 3, 2015

SAN FRANCISCO — A hacker has acquired the records of 15 million T-Mobile customers and people who had applied for credit, the company reported Thursday.

The breach, which affected two years worth of records,occurred at Experian, the vendor that processes T-Mobile's credit applications, T-Mobile CEO John Legere said in a post on the site.

Experian North America said in a notice that one of its business units was compromised, but that its consumer credit bureau was not affected.

Experian has notified both U.S. and international law enforcement. Experian North America's parent company, Experian is headquartered in Dublin, Ireland.

"The investigation is ongoing, but what we know right now is that the hacker acquired the records of approximately 15 million people, including new applicants requiring a credit check for service or device financing from September 1, 2013 through September 16, 2015," Legere wrote.

"The data set was for applicants and customers of T-Mobile who applied for service over that two year period," said Experian spokeswoman Susan Henson.

The breach happened approximately two weeks ago. It "was discovered within two days, secured immediately, comprehensive forensic investigation launched (and still continuing) and we announced it today to quickly notify consumers. Our notification to state attorneys’ general happens tomorrow," Henseon said.

In a refreshing change from the corporate-speak often used by CEOs whose businesses are breached, T-Mobile's Legere stayed true to form with his directness.

"Obviously I am incredibly angry about this data breach," he said, saying he would conduct a "thorough review" of his company's relationship with Experian but that his top concern for now was "assisting any and all consumers affected."

The compromised information includes customers' names, addresses and birth dates as well as encrypted fields with Social Security number and ID number, which could be a driver’s license or passport number.

Experian told T-Mobile the encryption protecting those numbers may have been compromised, Legere said.

Experian and T-Mobile have set up two years of free credit monitoring and identity resolution services for compromised customers. Ironically, the service is being offered through Experian's own credit monitoring service.

Experian cautioned consumers that under no circumstances would either Experian or T-Mobile call them or send them messages asking for personal information in connection with the breach.

"You may go to the website, but you should not provide personal information to anyone who calls you or sends you a message about this incident," Experian said in a statement.

Thursday, October 1, 2015

By: Dave Sullivan.People always ask “How can I get a perfect credit score?” The truth is, credit scores above 760 will get you the very best loan rates. If consumers credit scores make it above 800 the only possible benefit is a slightly better home and auto insurance rates. What is the formula for a perfect credit score? I’ve seen a few perfect credit scores and I have seen a few that we’re almost perfect. The ones that are close to perfect credit tell a very interesting story. Here are the 7 steps to the perfect 850 credit score;1. The number one most important thing is no late dates ever. Never late on any account and no collections. Also you can not have any current accounts that are marked “was 30 – 60 – 90 day late now current” All accounts need to have 100% perfect payment history.2. Consumers need at least one bank credit card that is thirty years old or older. A thirty year old history with no late dates ever on that account. That is a key anchor for a perfect FICO(r) credit score.3. One important ingredient that will keep consumers from a perfect credit score is, a store credit card. Store cards will not give you as many points as a bank credit card. One of the “Reason Codes” on a almost perfect credit report I recently reviewed listed; “too many store credit cards” as the reason why the credit score was not higher. (they only had one).4. Another important ingredient is five to seven bank credit cards with balances around five percent of the high credit limit, not zero, although some of the perfect credit scores had accounts that were zero.I tell people to keep their balances at five to nine percent if you want to get the best score. In addition, you need to have the every other credit card with at least five to ten years of history.5. Another common ingredient is an old mortgage. The mortgage needs to be in the last few years of a thirty-year or fifteen year mortgage. Meaning the mortgage is nearly paid in full.6. An optional ingredient is a home equity line of credit. I’ve seen perfect credit scores with and without a home equity line of credit. I like the home equity line of credit from a credit perspective because it gives you a real boost in your credit score.7. The last two ingredients are; no new account less than five years old. No credit card, auto loan or mortgage of any type less than five years old. Also you cannot have any hard inquiries in the last two years. A hard inquiry is when you apply for credit. A soft inquiry is when a consumer checks their credit for their own information.

That is a formula for a perfect credit score. If you want to see more videos about credit and credit scoring check these out at www.thecreditguy.tv.

This is the first article that I have re-published from anyone who holds an anti-credit repair viewpoint. Dave works for a large national mortgage tri-merge credit report provider which is where he get's his experience and knowledge. I really hope that you have learned a lot from this article!

Like many mortgage industry insiders, Dave is only against credit repair companies that simply write dispute letters and sell a dream without backing it up. All of you know that is NOT what Credit Restoration Associates is about. REAL credit repair is a true art, and there are not enough artists.

Call us at (804) 823-9601 for a professional credit report review and professional credit consultation at absolutely no charge.

Thursday, September 24, 2015

Rental Kharma will first verify your rental lease with your property manager. After verification, they will report up to the past 24 months of history to Transunion. (They are working to add Equifax and Experian).

It will report as an "Open Tradeline". If you have more than one lease or have co-signed for someone else, it will report as a "Joint" tradeline. You can have more than one tradeline added if your name is on multiple leases.